The US grocery market is forecast to be worth $1,722 billion by 2022, driven by strong growth in the online and discount channels, according to new figures from grocery research organisation IGD.
The organisation expects online to be the fastest growing channel in the US over the next five years, with a compound annual growth rate of 18.1%, representing a $20 billion opportunity for retailers.
“The online channel is developing at pace in the US," said Stewart Samuel, IGD's North America programme director.
"Although many leading retailers have operated online for over 20 years, it is only in the last three years where we have seen an acceleration of investment and activity."
Stewart noted that several factors are underpinning this growth, such as the expansion of click & collect programmes, the growing popularity of meal kit delivery services, and new partnerships between grocery retailers and third-party companies.
“A key area for retailers to focus on is to make online shopping as convenient as possible, with a particular emphasis on making it easier to order frequently purchased products," he added.
Overall, the US grocery market is forecast to have a compound annual growth rate of 3.6% from 2017-2022.
In addition to online retail, the discount channel is expected to generate growth, driven by the expansion of dollar stores and hard discounters such as Aldi and Lidl.
However, the market share of hypermarkets and supermarkets is forecast to decline over this period, as retailers continue to rationalise their store networks.
“We expect hypermarkets and supermarkets to face a more challenging time, with both experiencing a declining market share over the five-year period,” added Samuel.
“However, as sales shift online, both types of store are innovating with new ways to entice shoppers in-store and merge the digital and physical worlds, for example by developing healthcare hubs, investing in their prepared foods and food-to-go ranges and using digital tools to inform, engage and reward shoppers.”
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.